How to Dissolve an LLC in Texas

Dissolving a business often involves complex procedures. However, for a limited liability company in Texas, dissolving it takes a handful of paperwork. When an LLC is formed in Texas, the owner(s) draft the operating agreement. If the owner(s) decide to dissolve the business, the dissolution takes place following the articles mentioned in the operating agreement.

In this article, LLCBuddy editors shared the ins and outs of dissolving an LLC in Texas. LLCs must file the Articles of Dissolution with the Texas Secretary of State like the formation certificate was filed at the time of forming an LLC in Texas. It takes a few days to process and a handful of fees to be paid to the SOS. Many people hire a professional service to do the paperwork to process it hassle-free.

At the time of forming an LLC, an operating agreement draft must be written. Generally, the process of dissolution takes place following the operating agreement (read: Texas LLC operating agreement). Before the dissolution process, there are a few things to consider in the LLC.

First, make sure all the members of the LLC agree to dissolve the business. Once all the members are ready, their consent should be recorded via voting. After casting their vote in favor of the dissolution, the legal process must be started.

Dissolution of a Texas LLC requires three broad procedural steps. Having a Texas LLC Operating Agreement, closing all the tax accounts, and finally submitting the Articles of Dissolution form to the Texas Secretary of State.

Step 1: Follow the LLC Operating Agreement in Texas

When you have started an LLC as a business entity, then there is an operating agreement that is formed. There are complete details of how the company will function and grow in that operating agreement, which acts as a comprehensive guide. There is also a dissolution process, which is added to your agreement. The common dissolution steps that almost every LLC follows are:-

First of all, the dissolution vote will take place among the LLC members in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.

All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
After that, a formal date for dissolving the LLC will be decided.
The next step is counting the LLC assets and dividing them among the stakeholders and members accordingly.
Finally, the creditors of the business are notified, and the debts of the business are settled.

This is a general process. However, it is strongly recommended to seek professional help to avoid any complications when it comes to terminating an LLC in Texas.

Get a Professional Agent Service

When it comes to a limited liability company dissolution, it is important to get professional help. A Registered Agent in Texas will guide you with everything you need to close your limited liability company. While choosing a registered agent, make sure they have a physical street address in the state. A professional service provider helps you to file the Article of Dissolution and close your various tax accounts without any hassle. Below are the best LLC services in Texas that we strongly recommend for you.

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Step 2: Close All Tax Accounts

Every action that an official business takes is legally bound to some minimum business taxes. For that, various accounts, especially business entity tax accounts, are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for your LLC’s duration and make a list of them. Take a look at the Texas Classification of LLC Tax to know more about the tax liabilities in Texas.

You must contact all government entities and clear the amount of outstanding taxes due by the date you have decided to dissolve. All the taxes must be paid in advance so that you don’t face any issues in the process of shutting down your LLC.

Some of the common taxes that limited liability companies have to pay are:

Unemployment insurance tax
Employee withholding tax if your LLC has employees.
If your LLC is engaged in selling taxable goods, then they are liable to pay the sales and use tax.

Most of these taxes are normally filed, but some departments require official paperwork, without which it is impossible for the business to close its accounts. Apart from business taxes, federal taxes, personal income taxes, and franchise taxes are to be considered. For the franchise taxes, a franchise tax form is required. That is why the LLC owner should go through the sales tax guide and hire an accounting service.

Tax clearance

While dissolving the Texas LLC, the owner is not required to obtain a tax clearance certificate. However, if you have filed federal taxes, then you must go through the final return option on your IRS form.

The IRS form for the LLCs that are classified as partnerships is Form 1065, and those LLCs that have registered themselves as corporations should check IRS Form 1120.

BOI Reporting

If you’re going to dissolve your LLC this year, make sure to update your BOI reporting. From January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) imposed a rule on all businesses, including LLCs in Texas, to file the BOI Report. The Beneficial Ownership Information (BOI) in Texas is a report that states about the in and out of the company. This report must be up-to-date and submitted to the FinCEN before you proceed with the dissolution.

Step 3: File Articles of Dissolution

There is a list of dissolution documents that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. Like a Texas Certificate of Formation, one has to file a Texas LLC Certificate of Formation. The dissolution procedure and filing the articles of dissolution form are very easy and are discussed below.

First of all, the LLC owner(s) have to file the Article of Dissolution. There are multiple methods of filing available, such as filing by mail, in-person drop-off, or/online filing.
You can follow the filing instructions on the official portal so that the steps for dissolution will be easier to complete.
For offline filing, LLCs must download the form and submit it to the Texas Secretary of State‘s physical office along with the state filing fee.
If you want to dissolve Texas Foreign LLC, then look for the Foreign LLC Dissolution process.
You must fill in all the important and legal information in the form, so you should be extra careful.
After filling in all the important information, you must choose the mode of payment you want to use to pay the LLC dissolution filing fees.
After filling in every detail, one should submit the form through an official email address and make a payment.

Filing	Forms and Details
Online Applications	Sign in to SOS Direct
Offline Applications	Certificate of Termination
SOS Contact (if offline application is available)	Secretary of State, P.O. Box 13697, Austin, TX 78711-3697
Filing Time	3 to 5 working days, but it can go up to 10 working days
Filing Fee	$40

The LLC you own is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call whether he accepts your expedited dissolutions or not.

Points to Be Noted When Dissolving an LLC in Texas

Apart from these three steps, no major dissolution rules exist in Texas. However, there are some other tasks one has to keep in mind while dissolving an LLC legally.

Winding Up

Some purposes of LLC require some attention even after dissolution, known as winding up. The task of winding up includes.

For a certain period, the property of a business requires preservation.
If there is any civil case against the LLC, then the owner needs to finish it.
Settle all the existing disputes of the LLC.
Transfer all the property of the LLC to the names of the partners.
Release all the liabilities that the LLC owes to others.
Rightful distribution of all the assets among members, according to their percentage of partnership.

Cost of Dissolving an LLC

LLC costs in Texas include the formation as well as dissolution fees. To dissolve an LLC in Texas, LLCs have to file an Article of Dissolution. The filing fee is $40. The details are mentioned in the articles of dissolution filing form. The following are the ways to pay for the dissolution,

You can select a payment pick-up option.
There is an option for direct account transfer through your prepaid accounts.
LLC owners can also use their Credit cards, providing their complete details and types. Along with that, an original signature is required to authorize the transaction that the state will make.

After Dissolving Your LLC

After you dissolve an LLC in Texas, you can reinstate or revive the same within a given time. In Texas, the LLC name will be available up to the time till SOS dissolves the LLC completely. After this, the name will be available to other LLCs. Besides, you might revive or reinstate the LLC in Texas if that is available. According to the Texas SOS, you can revive your LLC within 3 years.

Reasons Behind Dissolving an LLC in Texas

People always think they can leave the company without any notice, and there will be no issue. But if you have an LLC that you created with a legal obligation, it needs to be ended that way. Yes, if someone dissolves an LLC in Texas, they will have to do it while taking care of the government. For dissolving the company, there is always a reason. The reason can be voluntary or involuntary, too. Let’s get to know about the involuntary reasons,

If the company were caught doing illegal business.
If the company’s member died for any reason or went bankrupt.
The dissolution will be mandatory if the assets of the business are used unwisely.
If the time of the company’s dissolution was already determined in the will, then the company will go into dissolution at that time.

Top Businesses in Texas

With a population of 30,345,487, Texas is one of the favorable places to start an LLC. According to several reports, starting an LLC for a Real Estate Business can be profitable, as various places in the state have shown steady growth in this business over the past few years. On the other side, based on the city or region you’re going to start your LLC, you can decide the type of business to start. The following are the top 5 businesses you can start in Texas.

Real Estate Business
Gift Shop
Coffee Shop
Cleaning Service
Daycare center

Texas LLC Dissolution Review – A Quick Recap

Here’s a recap of the steps you must follow when dissolving your Texas LLC. Click on the steps in this list if you want to read the full details.

Follow Your Texas LLC Operating Agreement: Remember that when you started, you created an operating agreement. Use this agreement as a guide in proceeding with the dissolution of your LLC.
Close All Tax Accounts: Make sure you close all your tax accounts to avoid incurring further costs.
File Articles of Dissolution: File the articles of dissolution to make it known to the state where your LLC operates that you are indeed no longer in business.

FAQs

How do I dissolve an LLC in Texas?

To dissolve an LLC in Texas, you must file a Certificate of Termination with the Texas Secretary of State.

Is there a fee for filing the Certificate of Termination in Texas?

Yes, there is a fee for filing the Certificate of Termination with the Texas Secretary of State.

Can I dissolve my Texas LLC online?

Yes, you can dissolve your Texas LLC online by submitting the Certificate of Termination through the Texas Secretary of State’s website.

What is the filing deadline for dissolving an LLC in Texas?

There is no specific deadline for dissolving an LLC in Texas, but it is recommended to dissolve the LLC as soon as it ceases operations.

Do I need to notify creditors before dissolving my Texas LLC?

Yes, you are required to notify creditors before dissolving your Texas LLC in accordance with Texas laws.

Can I dissolve an LLC in Texas without the approval of all members?

Generally, all members must agree to dissolve the LLC in Texas unless the operating agreement states otherwise.

How long does it take to dissolve an LLC in Texas?

The process of dissolving an LLC in Texas can vary, but it typically takes a few weeks to complete.

What is the first step to dissolve an LLC in Texas?

The first step to dissolve an LLC in Texas is to hold a meeting with the members to inform them of the decision to dissolve.

Can I revive a dissolved LLC in Texas?

Yes, you can revive a dissolved LLC in Texas by filing a Reinstatement Application with the Texas Secretary of State.

Do I need to file a final tax return for my dissolved Texas LLC?

Yes, you must file a final tax return for your dissolved Texas LLC with the IRS and the Texas Comptroller of Public Accounts.

Do I need to cancel my Texas LLC’s permits and licenses before dissolving?

Yes, you should cancel any permits and licenses associated with your Texas LLC before dissolving to avoid any penalties.

Can I dissolve my Texas LLC if it has outstanding debts?

Yes, you can dissolve your Texas LLC even if it has outstanding debts, but you must settle or address the debts before dissolving.

What happens to the assets of a dissolved LLC in Texas?

The assets of a dissolved LLC in Texas are typically distributed to the members according to the operating agreement or state law.

Do I need to publish a notice of dissolution for my Texas LLC?

No, you are not required to publish a notice of dissolution for your Texas LLC, but it is recommended to inform creditors and other parties.

Can I transfer the Texas LLC’s assets to another entity before dissolving?

Yes, you can transfer the assets of your Texas LLC to another entity before dissolving, but this should be done in compliance with state laws.

What is the process for distributing assets during the dissolution of a Texas LLC?

The process for distributing assets during the dissolution of a Texas LLC involves paying off debts, distributing assets to members, and filing final tax returns.

Is there a waiting period after filing the Certificate of Termination for a Texas LLC?

No, there is no specific waiting period after filing the Certificate of Termination for a Texas LLC, but it may take a few weeks for the dissolution to be finalized.

Can I dissolve my Texas LLC if it is involved in a legal dispute?

Yes, you can dissolve your Texas LLC even if it is involved in a legal dispute, but you should address the dispute before finalizing the dissolution.

Do I need a lawyer to dissolve my Texas LLC?

While it is not required to have a lawyer to dissolve a Texas LLC, it is recommended to consult with a legal professional to ensure compliance with state laws.

Can I dissolve my Texas LLC if it is in bankruptcy?

Yes, you can dissolve your Texas LLC if it is in bankruptcy, but you must comply with bankruptcy laws and procedures during the dissolution process.

What happens to the liabilities of a dissolved Texas LLC?

The liabilities of a dissolved Texas LLC are typically settled from the assets of the LLC before any remaining assets are distributed to the members.

Can I dissolve my Texas LLC if it is still making a profit?

Yes, you can dissolve your Texas LLC even if it is still profitable, but you should evaluate the financial implications of the dissolution.

What happens if I fail to file a Certificate of Termination for my Texas LLC?

Failure to file a Certificate of Termination for your Texas LLC could lead to obligations and liabilities continuing for the LLC, even after it ceases operations.

Do I need to notify employees when dissolving my Texas LLC?

Yes, you are required to notify employees of the dissolution of your Texas LLC in compliance with state labor laws and regulations.

Can I dissolve my Texas LLC if it is suspended or in bad standing?

It is recommended to first resolve any issues causing suspension or bad standing before attempting to dissolve your Texas LLC officially.

Can I dissolve my Texas LLC if it is involved in ongoing legal proceedings?

It is essential to consult with a legal professional before attempting to dissolve a Texas LLC that is involved in ongoing legal proceedings to avoid potential complications.

Can I dissolve my Texas LLC if it is delinquent in filing annual reports?

You should first bring your Texas LLC up to date in filing annual reports before attempting to dissolve it to avoid additional penalties or complications.

Is there a specific form required to dissolve an LLC in Texas?

Yes, you must file a Certificate of Termination form with the Texas Secretary of State to officially dissolve your LLC in Texas.

Can I dissolve my Texas LLC if it has outstanding tax obligations?

Yes, you can dissolve your Texas LLC even if it has outstanding tax obligations, but you must address and settle the tax liabilities before completing the dissolution process.

What is the filing fee for dissolving an LLC in Texas?

The filing fee for dissolving an LLC in Texas is $40.

In Conclusion

Dissolving a business is not an easy task, as a lot of homework is involved with the process. The official process might have only a few steps, however, before and after dissolving the LLC, there might be a lot of other tasks. In this case, it is highly recommended to get a professional service. If you are looking to file an LLC at $0, then ZenBusiness is your answer.

Limited liability companies reduce owners’ personal liability. Having an LLC is quite cost-effective. However, if it is required to close down the business, then the dissolution process should be done legally. This article shared the general steps. Let us know if you have any queries.